Hill & Smith sees revenue growth but profits dip in tough conditions

CONSTRUCTION products supplier Hill & Smith has seen underlying pre-tax profits drop by more than 11% despite an 8.6% annual rise in revenue.

The Shirley-based company said the performance while disappointing, was in line with expectations in what remained a difficult trading environment.

Revenue grew to £406.2m (2010: £374.2m); however, underlying pre-tax profit fell 11.4% from £42.2m to £37.4m. Basic earnings per share declined from 32p last year to 20.9p, a fall of 34%.

Nevertheless, full year dividend rose 3.9% to 13.2p per share (2010: 12.7p).

Derek Muir, Hill & Smith chief executive, said: “Our businesses produced a robust performance in the second half of 2011, with a particularly strong performance from our international utilities operations.  
 
“The benefits of our increasingly international profile and our now limited exposure to UK government spend, show through clearly in our recent and current performance. We are targeting 75% of profits to come from overseas operations by the end of 2013.”
 
He said encouragingly, the momentum of the stronger trading seen in the second half of 2011 had continued in the first two months of 2012. Order backlog in the utilities sector remains healthy and galvanizing volumes overall are ahead of group expectations.

Part of the good performance is due to the ongoing UK managed motorway programme, which the firm said should provide a good base for progress through 2013.  
 
“Whilst we anticipate the first half of 2012 being stronger than the same period in 2011, the full year’s results will depend upon the current momentum continuing in the second half of 2012 in what remains uncertain economic times,” added Mr Muir.  
 
However, he said the group was confident that the acquisitions completed in 2011, coupled with growing international business and the strength of its market positions offered growth prospects in the medium term.

Bill Whiteley, chairman of the group, also used the results statement to pay tribute to former chief executive, and latterly company chairman, David Grove, who died last year.

“David was an inspirational leader of the expansion of the group and his passion and enthusiasm for the company will be sadly missed,” he said.